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Outsourcing as a New Trend in the Healthcare Industry

Outsourcing as a New Trend in the Healthcare Industry

Some of an organization’s operations are outsourced to another vendor or a smaller facility that has expertise and specialization in a specific area. It enables hospitals to focus on core operations and services such as clinical diagnosis, medical care, and nursing support.

Outsourcing is becoming an increasingly popular strategy for healthcare organizations to use in order to keep service costs under control. Through outsourcing, an external contractor assumes responsibility for managing one or more of the business, clinical, or hospitality services provided by a healthcare organization. Because the contractor specializes in specific services and can achieve economies of scale, they may be able to provide a service more efficiently and at a lower cost than the healthcare organization. Outsourcing services that are not directly related to the organization’s primary operations may also allow healthcare administrators and staff to devote more time and effort to the organization’s core operations.

When you think of the healthcare industry, you might imagine doctors and nurses rushing through hospital corridors, but there’s more to it. The back-office functions that keep the healthcare running 24 hours a day, seven days a week, are critical to its success. Many healthcare organizations have turned to outsource because they lack the resources to keep all of those essential employees on staff.

Consider the following example: According to a 2019 market study, the global healthcare outsourcing market is expected to reach $449.6 billion by 2023, with a compound annual growth rate of 12.3 percent. The growing need to reduce critical errors cut operating costs, and provide better services will drive market growth.


Support functions such as housekeeping, food services, laundry services, and even SCM are typically outsourced by healthcare organizations. However, many have begun outsourcing more services to save time, office space, and money. Today, the healthcare outsourcing industry handles various functions, from data entry to medical claims processing to medical billing.

We’ve listed the operations that healthcare organisations should consider outsourcing and the benefits they’ll receive if they do.

North America, as a source geography, accounts for the majority of the market’s revenue

North America dominated the healthcare BPO market in 2021, with a 49.0 percent share, followed by Europe (30.6 percent) and the Rest of the World (RoW) (20.3 percent ). Factors such as increased cost-cutting and service-improvement pressures, as well as changing government regulations, are driving the growth of the healthcare BPO market in North America. In the United States, pharmaceutical companies are facing significant price pressures due to the Medicare Prescription Drug Coverage (Part D), which provides prescription drug coverage to all Medicare recipients. Furthermore, the patent expiration of several blockbuster drugs is expected to have an impact on the revenue of large pharmaceutical companies in the United States and Canada. Considering these factors, a number of pharmaceutical companies are focusing on cost reduction through outsourcing.


Major Players in the Market

The major players have established a strong foothold in the market and provide a comprehensive range of services. There are a number of major players in this market, including Accenture (Ireland), Cognizant (US), Infosys BPM (India), IBM Corporation (US), IQVIA (US), TCS (India), Wipro (India), and WNS Holdings (India).

The Advantages of Outsourcing in the Healthcare Industry

The overall patient experience can be significantly enhanced by utilizing outsourced staff, from check-in to diagnosis to recovery to discharge and everything in between. Numerous healthcare organizations seek outsourced solutions to alleviate financial constraints and free up resources while still providing high-quality service and patient care in a heavily regulated industry. The following are some of the ways that outsourcing can benefit healthcare providers:

  • Reduce the cost of accessing trained professionals and industry experts by partnering with them.
  • Increase the efficiency and productivity of your employees.
  • Improve the quality of patient care, as well as their experiences and outcomes
  • Avoid billing issues that can be extremely costly.
  • Improve employee access to better benefits while keeping costs down.
  • Resources should be scaled according to specific requirements.
  • Make certain that all applicable laws are followed.
  • Concentrate on providing patients with high-quality care.
  • Manage administrative tasks that are repetitive and mundane.
  • Cost savings should be increased.
  • Save time and money by eliminating hiring and training support staff. Maintain patient confidentiality while complying with HIPAA regulations
  • Reduce the number of medical claims that are denied and rejected.
  • Drive processes that are free of errors.

Aside from cost savings, outsourcing provides you with access to a professionally qualified and experienced workforce that can help you meet the demands of your various clinical responsibilities and other related tasks in an accurate and timely manner. To stay one step ahead of your competitors and meet the growing demands of the healthcare industry, you should consider outsourcing the functions listed above to professionals who have been trained to meet medical industry specifications.

There is a compelling case to be made in favor of outsourcing services. After all, diagnosing and treating patients is the primary responsibility of a healthcare professional. In theory, by outsourcing non-core functions, healthcare providers can reduce costs while simultaneously improving service levels and patient outcomes. However, outsourcing entails risks, and as healthcare providers increasingly consider outsourcing more aspects of their operations, they must understand the liabilities involved to determine whether the benefits outweigh the drawbacks of the decision.

Healthcare is one of the most important industries globally, and it has been lagging behind the majority of other industries in terms of outsourcing adoption until recently. Increasing competition in the healthcare industry means that organizations must learn to provide excellent patient care to remain competitive. Patients have a variety of providers and health systems to choose from in most geographic areas. It is critical to ensure patient satisfaction to encourage providers to receive repeat business and referrals. However, the digital health trend is already prepared to provide the consumer with a very unusual patient profile template project as part of its ongoing development. An offline clinic’s operational efficiency is enhanced by combining telemedicine’s functionality, convenience, and mobility. Unfortunately, providing excellent care necessitates a significant time and resource investment. Facilities must spend more money, both on a regular basis and through larger capital investments. Unless they outsource, of course.

As a result, healthcare software development services are in high demand. A diverse range of technological competencies enables outsourcing companies to put ideas and business objectives into action successfully.

It is well known that hospitals and other healthcare providers must reduce their costs in the healthcare industry. Even though healthcare costs in countries like the United States have risen prohibitively, this generous flow of income is still not enough to cover the costs. According to a recent survey by Black Book, the average hospital will need to reduce its costs by 24 percent by 2022 to break even and remain profitable. The cost structures of hospitals have reached an unsustainable level. As a result, nearly every provider is considering outsourcing, and the vast majority has already done so in one or more areas of their operations.

IT services are one of the most frequently outsourced areas. By 2023, the global healthcare information technology outsourcing market will reach $61 billion. As providers continue to focus on electronic health records (EHR) and data management, operations management, asset management, and billing services, information technology administration is the most outsourced area.

Outsourcing, on the other hand, has spread far beyond the realm of information technology. Laboratory (pathology and microbiology), pharmacy, radiology, dialysis, magnetic resonance imaging, nuclear medicine, mental health services, physiotherapy and rehabilitation, speech and language therapy, occupational health therapy, medical tourism, and home-delivered healthcare are among the most commonly outsourced clinical services. Non-clinical outsourced services now include, in addition to information technology, facility management, sterilization, meals, patient transport, procurement, security, and other services.

It’s no surprise that healthcare providers are increasingly reliant on outsourcing for a wide range of services to manage their increasingly complex environments. The social scrutiny of rising patient costs is high, which is a good thing. Furthermore, providers must reduce costs as quickly and significantly to remain competitive and profitable. Hospitals, in particular, are being squeezed by shrinking profit margins, rising patient expectations, and a lack of federal support.

In the United States, hospitals can lose as much as 20 to 30 percent of their revenue simply because of billing issues. Additionally, antiquated technology systems result in US hospitals absorbing an estimated $8.3 billion in costs each year due to outdated systems. In addition, the cost of highly-skilled, full-time employee resources frequently outweighs the cost of working with a third-party vendor in many cases. Furthermore, by outsourcing service lines such as diagnostic imaging, hospitals can provide cutting-edge medical services without requiring significant capital investments to upgrade their equipment. If everything goes according to plan, the cost savings realized through outsourcing can be game-changing.

Another “pro” of outsourcing is allowing a provider’s talent pool to grow. Particularly in rural areas, it can be difficult to find highly skilled and niche talent and outsourcing can assist health systems in bridging that gap. The importance of the academic level of professional nursing is the most distinguishing feature. It is difficult for students in these fields to obtain excellent nursing essays and earn high grades. Because to achieve the best results, you must have both practical experience and theoretical knowledge. Outsourcing companies recognize that a high level of professionalism is required in the healthcare industry. By bringing in knowledgeable and competent resources to manage critical operational areas, existing staff is freed up to devote their time and attention to patient care. When providers outsource their most time-consuming management and administrative tasks, they free up their time to focus on improving their patients’ health. Increasing productivity, increasing employee satisfaction, lowering training costs, and ultimately lowering turnover benefits from doing business this way.

In the same way, a productive and contented staff results in healthier and happier patients. According to an online survey of doctors conducted this year, 44 percent of doctors are experiencing physician burnout. This is not a favorable solution for any of the parties involved. It is necessary to reduce this workload because a healthy workforce is critical to improving patient outcomes and achieving national healthcare objectives. Although we cannot significantly reduce the number of patients, increasing the number of employees will cause costs to skyrocket even further. Outsourcing is one of the most effective patterns of addressing this problem, as it reduces overall costs and expenses without compromising the quality of patient care provided to the patient.

Outsourcing, on the other hand, is not a panacea. The risks can be significant, and providers must conduct extensive due diligence upfront to ensure that the appropriate services are outsourced to the appropriate partners.

Data breaches and patient privacy issues have been identified as the most significant risk factors. In the year 2018, a total of 15,085,302 patient records were compromised. When comparing 2018 to 2017, this figure more than tripled. In both health systems that outsource and those that manage data internally, hackers and data breaches threaten patient safety. Data breaches and confidentiality concerns, on the other hand, are most prevalent among business associates and third parties, making it imperative for providers and outsourcing partners to implement risk management programs that protect patient data and comply with HIPPA requirements.

In addition to the lack of technology platform standardization and data standardization, there is a scarcity of internal IT leaders familiar with managing outsourced solutions in the IT industry.

Outsourcers must also take into account the possibility of encountering quality issues. Frequently, poor quality is caused by misunderstandings about the scope of the work and the total cost of the services being provided. In the early stages of developing a successful outsourcing partnership, healthcare organizations should not underestimate the amount of time and effort. Providers and vendors must explicitly define the scope of the work, the standards and objectives by which it will be measured, and the total cost of every possible scenario that has been agreed upon. Through the explicit definition of the services to be provided and the performance levels to be met, both parties can make SLAs the foundation of their agreement, reducing the likelihood of misunderstandings.

Organizations must ensure that vendors can be held accountable for their performance and that the scope of the work does not extend beyond what has been agreed upon in advance. Working only with vendors with extensive industry experience and ensuring that vendors adhere to industry best practices, such as ITIL and PMI standards, can also help mitigate quality-related issues.

Control issues can also be a source of contention in an outsourcing relationship. When contracts expire, outsourcers may experience service interruptions, an unstable workforce (due to limited staff availability and high turnover), and difficulty switching vendors if the situation arises. When delivering services through a vendor, providers must ensure that the savings realized outweigh the costs and headaches experienced due to quality and control issues.

However, assuming that providers mitigate risks to the greatest extent possible and choose their vendors wisely, outsourcing can yield significant benefits. Patient experiences can vastly improve throughout hospitalization, from check-in to diagnosis to recovery to discharge. Outsourcing to reduce costs, increase access to specialists, improve patient care, reduce critical errors, and even enable providers to offer more services are benefits of outsourcing. It continues to be the most effective strategy for achieving a financially sound bottom line.

Human Resources Services that are more effective

Outsourcing human resources services can help you manage your human resources administration and benefits administration. Your outsourced HR team can offer a more comprehensive benefits package and health insurance at a lower cost. They can also assist you with services such as creating employee manuals and handbooks, hiring and training employees, and more — all while saving you money on the cost of hiring an in-house HR team. They frequently provide software that allows you and your employees to access critical information easily.

Payroll Administration that is effective

The cost of employing highly-skilled, full-time payroll personnel can be exponentially higher than working with an outsourcing company. Payroll management services can assist you in making timely and accurate payments to your employees. Your outsourced team might also provide payroll software that allows you to enter, screen, check, and send payroll data for processing.

Incorporation of IT systems

The global healthcare IT outsourcing market is expected to reach $61.2 billion by 2023, according to Transparency Market Research. IT administration is the most outsourced area in the healthcare industry due to increased demand for electronic billing and payment systems, maintaining electronic health records, and implementing cloud computing.

Data collection and analysis that is efficient

Outsourcing allows you to use cutting-edge technology for data collection and analysis without investing additional funds. Several healthcare organizations have already outsourced data entry tasks to improve efficiency and productivity. However, in response to rising customer expectations for high-quality services, businesses have begun to outsource data management processes for clinical research, billing, health outcomes, and other purposes. Outsourcing allows you to gain access to healthcare professionals who are experts in dealing with various data types.

Medical billing that is 100% error-free

Every day, hospitals and healthcare professionals process hundreds of medical records. On the other hand, medical coding and billing can be complicated compared to other industries. You may encounter costly billing errors when processing your patient’s medical bills if you lack the necessary knowledge and expertise. Outsourcing your medical billing services can provide you with a highly trained team to handle these records. Furthermore, creating medical bills necessitates adhering to certain standards and rules, which the outsourcing company is well-versed in. Outsourcing the work to a specialised service provider can help you avoid coding and billing snafus.

Medical Billing and Claims Processing

The processing of patient claims is a critical aspect of the healthcare industry. Working with an outsourced medical claims processing team, you can ensure that you are up to date on the latest regulatory changes and that your medical claims are submitted to insurers accurately. They are professionals means that the outsourced teams are already well-equipped with the resources required to complete the job correctly and efficiently. They have highly trained employees and cutting-edge technology to handle large volumes of medical claims quickly and efficiently.

Data Entry Services are available

Additionally, healthcare providers must capture and update massive amounts of medical data daily to provide medical care to patients. These professionals must manage lab results, prescriptions, patient insurance information, patient records, and medical information. Outsourcing data entry activities will assist you in freeing up time and resources to devote to other important aspects of your healthcare practice. Because medical data entry is far more technical than most other fields, you should consider hiring a professional to handle it for you. When you hire the right outsourcing team, you can rest assured that your organization will adhere to all applicable guidelines, rules, and regulations in the healthcare industry. They can also manage your patients’ appointments, reminders, and rescheduling to make patient assistance more streamlined.

Services for Clinical and Patient Care

The outsourcing of clinical services, such as diagnostic imaging, and patient care services, such as therapy and pharmacy, has seen a recent increase in popularity in the industry. Many organizations outsource these services because it allows them to expand their ability to provide comprehensive services without making the significant investments required to upgrade in-house equipment and hire specialty healthcare professionals in a specific specialty.

Management of the Hospital Infrastructure

Outsourcing infrastructure management services such as equipment planning, procurement, maintenance, waste management, pest control, sterilization, cleaning services, patient transport, and security can free up your time to devote your attention to patient treatment and care instead of infrastructure management.

Authors Biography

Mohammad Heydari is an Iranian associate professor, scientist, and author. He was born on August 14, 1992, in Tehran, Iran. He published more than 13 books and over 88 scientific papers with famous authors and high-level research groups in his research fields; Currently, his papers are published and accepted by 37 different countries. 

Mohammad Heydari is currently working at Business College, Southwest University, one of the country’s 100 key national universities. In August 2020, Dr. Heydari was accepted as the youngest associate professor and faculty member of Management Science and Engineering (MS&E) at Business College, Southwest University, Chongqing, China. At the same time, he was nominated for the “National Young Talent Program” title, one of the highest awards for foreigners working in academia. 

In 2019, he received the Chinese Government Ministry Award Education Scholarship for outstanding research and academic activities at the national level. In 2017, Dr. Heydari received the (Nanjing Municipal Government) scholarship in (MS&E). Dr. Heydari earned his DSc., Ph.D. from the School of Economics and Management, Nanjing University of Science and Technology, China. Dr. Heydari’s research is in the areas of (1) Human Resources and Business Administration, Organizational Psychology and Organizational Behavior and Organizational Studies; (2) Applied Mathematics, Optimization Algorithm & Operation, Supply Chain Management, and Decision Analysis; (3) Entrepreneurship Management and Psychological Entrepreneurship Research.

Author Email: [email protected]

Mahdiye Saeidi is an Iranian researcher and author. She was born on February 17, 1978, in Arak, Iran. She published one book, accomplished many scientific papers with Dr. Mohammad Heydari and worked in high-level research groups. Mahdiye Saeidi is currently working at Business Operation Dept. in National Iranian Tanker Company, one of the biggest shipping companies in the world, as a vessels’ demurrage and freight account, controller and vessels’ operator from March 2004. In 2017 she reached her Master’s degree in Information Technology from Payam Noor University of Tehran. The title of her Master’s thesis was assessing the effective factors in the acceptance of Internet of Things technology in smart buildings. She researches in (1) Information Technology (2) Human Resources and Business Administration.

Author Email: [email protected]

Siyi Liu, who is also called Rita, was born in Xiangtan, Hunan Province, China, on October 10th, 2003, and raised in the same city. She currently studies International Economics and Trade at the Business College of Southwest University, Chongqing, China. During her studies and work in the university, she was hard-working, motivated, and responsible, participating and organizing a variety of activities. She is now one of the members of Dr Mohammad Heydari’s research group and is ready to devote herself into master and Ph.D. degree. Her interested research areas are Human Resources and Business Administration, Industrial and Organizational Psychology, Organizational Behavior, Organizational Studies, Psychological Entrepreneurship Research, Supply Chain Management and Entrepreneurship Management.

Author Email: [email protected]